Pain awaiting Ellington Residential Mortgage REIT (NYSE:EARN) ahead?

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Shares of Ellington Residential Mortgage REIT (NYSE:EARN) last traded at $14.50. (NYSE:EARN) performance year to date is 14.55%. The 200 day simple moving average is 11.21%. The 200 simple moving average (SMA) is considered a key indicator by traders and market analysts for determining the overall long-term trend. The price level in a market that coincides with the 200 SMA is recognized as a major support when price is above the 200 SMA or resistance when price is below the 200 SMA level.

Ellington Residential Mortgage REIT is a real estate investment trust that specializes in acquiring, investing in and managing residential mortgage and real estate-related assets. Ellington Residential Mortgage REIT is based in United States.

Ellington Residential Mortgage REIT (NYSE:EARN) has been in the news for all the right reasons. Recently, Ellington Residential Mortgage REIT (NYSE:EARN) announced that it has commenced a public offering of 3,000,000 common shares. The Company expects to grant the underwriters an option for 30 days to purchase up to an additional 450,000 common shares. Morgan Stanley and JMP Securities will serve as joint bookrunning managers for the offering and Ladenburg Thalmann will serve as co-manager.

The Barchart Technical Opinion rating is a 24% Sell with a Weakening short term outlook on maintaining the current direction. Longer term, the trend strength is Minimum.

The Exponential Moving Average (EMA) is similar to a simple moving average (average price over a set period) but it utilizes a weighting factor that exponentially declines from the most recent data point (recent prices are weighted higher than oid prices). EMA analysis compares the short term (5 days and 13 days), intermediate term (20 days) and long term (50 days) EMA’s. The respective EMA’s will give bullish signals when trading above trailing EMA’s and below the current price and vice versa. EMA alerts include crossovers (i.e the 5 day EMA crosses above/below the 20 day EMA) and EMA convergencies (5 day EMA equivalent to 13 day EMA). The 5 day EMA 15.05 is higher than the last trade price suggesting a short term bearish pattern building up. Long term, the 50 day EMA 14.73 is also higher than the current trading price depicting a bearish trend overall..

The relative strength index (RSI) is a momentum oscillator that is able to measure the velocity and magnitude of stock price changes. Momentum is calculated as the ratio of positive price changes to negative price changes. The RSI analysis compares the current RSI against neutral(50), oversold (30) and overbought (70) conditions. Alerts will inform you when stocks recede from oversold/overbought levels or breakthrough neutral (50). The current RSI is 40.41 suggesting a bearish price action.

Ellington Residential Mortgage REIT (NYSE:EARN) is all set to announce its earnings on May 02/a. As per Zack’s analyst ratings, Ellington Residential Mortgage REIT (NYSE:EARN) currently has an average brokerage rating of 3. On a scale of 1 to 5, a rating of 1 or 2 would indicate a buy, and a rating of 4 or 5 would signify a sell recommendation. A rating of 3 would indicate a hold on the stock. The consensus target price on (NYSE:EARN) is $14.5 with a high of $14.5 and a low of $14.5.

As such, while we believe Ellington Residential Mortgage REIT (NYSE:EARN) represents a compelling growth story exposed to several secularly attractive markets, it would be interesting to see how it fairs for long-term investors.

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